In an exclusive interview with Daily Sabah, Science, Industry and Technology Minister Faruk Özlü said if the public approves the presidential system, it would give momentum to economic projects. He also provided details on major projects, including the domestic automobile and satellite, as well as establishing a research center in the Antarctic
Underscoring that the approval of the proposed presidential system in the upcoming referendum will give impetus to achieve projected levels of development, Science, Industry and Technology Minister Faruk Özlü said this system will also help Turkey escape the middle class trap. He touched on the domestic automobile project undertaken by the ministry, affirming that the first model of a domestic electric car, expected to be mass-produced by 2019, will be used as taxis.
Moreover, indicating that they have regulated R&D support to render it more efficient and that this support will be distributed from a singular center, Özlü added they have established a platform consisting of leading business people and industrialists to helm Turkey's transformation, which is essential to catch up to the fourth industrial revolution.
Daily Sabah: How will transitioning to a presidential system affect Turkey's industrial and technological policies, and in what ways will it contribute to Turkey's development? Can you please explain?
Faruk Özlü: Turkey reached upper-middle income levels from middle income after 2002 by transitioning from low-tech production to medium tech. In this context, balancing the distribution of industrial investments to the region, accelerating the development of the manufacturing industry, increasing the production and export of hi-tech products, which have high level added-value, are important to escape the middle class trap and transform Turkey's economy into a high income one. Now, we have to take our efforts and aims to the next level.
In this sense, Turkey's transition to the presidential system will give impetus to achieving the projected levels of development. This system will allow swifter decision-making mechanisms, increase domestic and foreign investments and bolster exports, GDP and national income. Thus, the increase in income per capita will allow our country to escape the middle-income trap. The roadmap for our industry foresees Turkey becoming the designing and production center of Afro-Eurasia in upper-middle and hi-tech products. In accordance with this vision, creating an added-value production system by manufacturing and exporting upper-middle and hi-tech products will make Turkey's economy and young workforce more dynamic, thus allowing us to become one of the leading G-10 countries.
DS: Could you tell us about the latest developments regarding the domestic automobile project? Also, how do you respond to criticisms that the project is unviable because there is surplus capacity in the automobile sector?
FÖ: Turkish industry has the capability to produce automobiles and then put them in the market. The production of automobiles is more of a commercial issue, rather than technological one. It is 20 percent technology and 80 percent commerce. Thus, we will continue with a model in which business organizations lead the project, while the state provides support.
Currently, there are certain industrialists that we're in contact with. We're collaborating with them, and we will continue with a new company, structure or consortium that will be formed by the said industrialists. We will provide the consortium with research done by the Scientific and Technological Research Council of Turkey (TÜBİTAK), and they will evaluate the data. Hopefully, our first car model will be an electric one. We will try to complete production of this car by 2019, which will first be employed as taxis. In this sense, it is a commercial matter, rather than technological. Certain existing firms in Turkey are already producing and exporting cars, while also creating employment. With this project, we aim to create a domestic brand that is 100 percent Turkish, both in production and design. Moreover, we aim to achieve global success by producing this electric automobile.
DS: A law regarding R&D and innovative activities came into force in the last months. To what extent will this law contribute to the increased export of high added-value products?
Countries that support their industry with policies focusing on the development of technology, innovative activities and R&D rank higher in the Global Competitiveness Index. Thus, I believe we should become a country that produces technology with strong, supportive R&D and innovation policies, instead of a country that consumes and transfers technology to bolster our international competitiveness.
Support and incentive mechanisms are definitely essential for R&D and innovation. Our ministry has started various support and incentive programs that cover all stages of production: The initial idea, project, mass production and commercialization. With these supports and incentives, we have started to form a healthy R&D and innovation ecosystem in Turkey. Furthermore, we work with all we have to reinforce this ecosystem by encouraging public institutions, universities, the private sector and NGOs to share their know-how and experiences. For this reason, we have implemented the R&D Reform Package to accelerate R&D and innovation activities in our country.
This reform foresees the provision of a 50 percent grant to project partners regardless of the budget, along with supports and exemptions provided to R&D centers via the Pre-competition Cooperation Projects (RİP) Support Program. Moreover, it also envisions formation of Thematic Technology Development Regions in strategic sectors, two-year state coverage of gross minimum wage for employees that are basic science graduates, while exempting these firms from paying taxes on imported equipment related to their research. On the other hand, looking at our track record in this field, we can say that we have taken a substantial leap forward in R&D and innovative activities in the last 10 years. While the budget for R&D and innovative activities was TL 4.4 billion ($1.21 billion) 10 years ago, today it is around TL 20 billion. Another important development that should be mentioned is the private sector's increasing investment in R&D. While TL 1.6 billion was spent in R&D by the private sector 10 years ago, today it has increased to TL 9 billion. During this process, our country's production and export structure started to transform from low-tech and lower-middle tech to upper-middle and hi-tech.
DS: As you have said, there has been an increase in R&D expenditure in recent years, and its ratio to Turkey's GDP has increased to 1 percent. In developed countries, this ratio is around 3 percent. What is your ministry doing to improve this ratio?
FÖ: In the last 14 years, our researcher numbers, along with patent application numbers and R&D expenditure, has increased substantially, however, the export of hi-tech products and their share of GDP has decreased. It seems that there is an issue with this system; thus, it has to be changed. To realize this change, we will abolish the Supreme Council for Science and Technology and replace it with the Executive Board for Science, Technology and Industry. As the proportion of hi-tech products in our industry is low, we are unable to create added value.
Currently, R&D support is provided by various state institutions, such as TÜBİTAK, the Ministry of Development, the Ministry of Science, Industry and Technology, and the Ministry of Food, Agriculture and Livestock. Due to this fragmentation, this support is not very effective.
With the new system, the state will distribute approximately TL 12.5 billion through a single institution. This is why the Executive Board for Science, Technology and Industry, which is to be led by the prime minister, is being created. On the other hand, instead of supporting every sector, we will focus on certain sectors like biotechnology, nanotechnology and communications. Through this approach, we will instill technology in our industry, and our industries will manufacture high added value products. The share of technology in our exports will increase. When we can sell a $10 product for $20, there will be no issues with current deficit or foreign trade deficit. We don't have vast oil or natural gas reserves; thus, our only capital is human capital. A Turkey that makes technology has a future.
DS: Previously, you announced that the first domestic communications satellite project, TÜRKSAT 6A, had started. What are the most recent developments in this project? Moreover, could you elaborate on what your ministry is doing in aviation and space technology?
TÜRKSAT 6A will be the first communications satellite developed completely with our national resources, distinguishing it from previous ones. The satellite, which will have 16 main and four reserve Ku-Band transponders, is expected to be in service by the end of 2019 and to be active for 15 years.
Weighing around 4.2 metric tons, including fuel, the satellite will be put into stationary orbit at 42 degrees eastern longitude. Many subsystems used in this project will also be employed by future Turkish communications satellites. In the aviation and space sector, our ministry foresees creation of the Ankara Aviation and Space Industrial Park, which will be one of the leading aviation centers in the world, producing hi-tech products with high added value. This project is in our investment program for 2017, and it will be set on 420 hectares of land. Moreover, it is expected that this project will provide employment to approximately 10,000 people.
DS: In recent years, the fourth industrial revolution and its effects on economies and societies started to be discussed extensively. What are some of the initiatives of your ministry to help Turkey be on target in this matter? Could you tell us?
Leading industrial and information societies, like Germany, the U.S., China, South Korea and Japan, have started to transition to the fourth industrial revolution and have already determined their strategies. This change and transformation process entails great potential and great threats to developing countries; thus, to make this process beneficial for our country, we have established a platform to bring the business world and leading industrial institutions together. Institutions like the Turkish Union of Chambers and Commodity Exchanges (TOBB), Turkish Exporters Assembly (TİM), Turkish Industrialists' and Businessmen's Association (TÜSİAD), Independent Industrialists and Businessmen's Association (MÜSİAD), Foreign Investors Association (YASED) and the Technology Development Foundation of Turkey (TTGV) constitute what we call the Platform for Digital Transformation of the Industry. Similarly, we have established various study groups consisting of representatives from the private sector, universities and NGOs under the platform. These groups will conduct technical and fieldwork in accordance with their field of interest, while taking the dynamics of our country into consideration, along with following international developments; then, this work will become the basis of policies and strategies during and after the transition to the fourth industrial revolution.
On the other hand, we are working on legislation to strengthen Turkey's production infrastructure and ecosystem. One of the direst needs of our country, the new patent law, was passed recently. We are now working on a production reform package to reinforce Turkey's production infrastructure. It will be brought to Parliament's attention shortly.
DS: What is the current condition of this reform package and what does it include? Could you elaborate on this?
We have completed our work recently and will submit the package to the Economic Cooperation Council first and then to the Council of Ministers. All cities in Anatolia have at least one industrial park near the city center. We will relocate these industrial parks to locations reasonably far from the centers, while equipping these new sites with social spaces. A budget of TL 17 billion is to be dedicated for this purpose. In accordance with this plan, we are allowing the private sector to establish industrial zones if they possess suitable land for it.
The industrial zone established on Jurong Island in Singapore has annual revenue of $50 billion. Instead of industrial parks, Turkey needs large industrial zones, along with ports. We have conducted a survey via our consulting firm, and industrial zones will be created in Filyos, Trabzon in the Black Sea region, Balıkesir in southern Marmara, Çandarlı in the Aegean region and in Ceyhan, Adana. If each of these zones can create revenue around $20-25 billion, it will significantly contribute to Turkey's development.
DS: Recently, there were statements that Turkey is to establish a science center in the Antarctic. Could you provide some information about this?
On the instructions of our president, we have started to work to establish a science center in the Antarctic. Political will is important; however, universities and the science community's support for this political will is more important. It is easy to send a research ship there, but the crucial part is the qualification of the scientists that are on board. Turkey will continue to focus on these kinds of projects, as we believe in our universities and scientists.
DS: Is there anything else you would like to add, Mr. Özlü?
The growth capacity of an economy depends on the number of firms that can develop themselves and improve their competitiveness, along with their quality. Moreover, development of human capital, the spread of information and communications technologies and a focus on innovation are important ways to increase income per capita.
Swift development in technology, coupled with increased deregulation of international trade and financial systems, creates a shift in how things are done. Making products and services with high added value becomes the determinant of competitiveness, while the education level and technical capabilities of the workforce become ever more important. In such an environment, the competitiveness of a firm is determined by its performance in services like design, logistics and distribution, instead of its production capabilities. As a result, stages of production not directly related to the process have started to become more important.
Today, a product's survival in markets is also a vital part of its competitiveness. This is only possible through design and branding. Aware of this fact, Turkey is providing increased support for design and branding.
Our ministry is also increasing support for R&D, innovation, design and entrepreneurship by the day to make our industry more competitive. We are working to bring science and industry together and increase added value in our industry. We know that Turkey's long-term competitiveness relies on R&D, innovation and high added-value products.